BoC Keeps Rates Steady
The Bank of Canada is holding firm on interest rates, as expected.
At its rate meeting this morning, the Bank kept Canada’s key interest rate at a record low 0.25%.
It reiterated expectations of flat rates until July 2010, saying:
“Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010…”
The Bank also seems untroubled about inflation, stating that the overall risks to its inflation projections are “tilted slightly to the downside.”
Looking further out, analysts are still mixed in their rate forecasts. RBC Global Management economist, Patricia Croft, says "A rate hike is in the cards by the third quarter of next year."
She maintains: "By this time next year, the world could be in a vastly different place."
To that end, the BoC is somewhat in agreement, stating: “the second half of 2009 could be stronger than the bank projected…"
Scotia Capital economist, Derek Holt, however, feels there is no indication that inflation could spike anytime soon. He says he wouldn’t be surprised if the Bank of Canada keeps rates on hold “for the remainder of 2010.”
Until we see more one-sided economic news, the longer-term future of rates will remain blurry. In the short-term, however, prime rate is not going anywhere.
The BoC’s next interest rate meeting is October 20.
